As many of us know, one of the biggest criticisms of the existing Ethereum protocol is the lack of throughput. As it stands today, the network currently processes an average of 15 transactions per second (TPS), far below legacy players such as Visa processing 50k+ TPS. With this in mind, a number of solutions have been proposed to increase throughput by sacrificing either security or decentralization.
Virtually all of the scaling solutions we’ve seen so far are layer 2, meaning that they function on top of or alongside the main Ethereum chain rather than being a fundamental change to the chain itself. While this notion has definitely opened a pandora’s box for a number of different ways to tackle the scaling issue (state channels, side chains and off-chain computation to name a few) the latest proposal introduces a solution that may very well take the whole cake.
Introducing Optimistic Rollups
Optimistic Rollups (ORUs) are a simplistic layer 2 scaling solution that leverage the Optimistic Virtual Machine (OVM) to allow for a roughly 100x throughput increase compared to the core Ethereum network we use today.
“(ORUs) resemble plasma but trades off some scalability to enable running fully general (eg. Solidity) smart contracts in layer 2, secured by layer 1.”
How Do They Work?
ORUs introduce key actors called “aggregators”. They accumulate a large number of transactions and publish them to a smart contract on the main chain. In short, Aggregators are trusted to deploy contracts, process user transactions and including them in a “rollup block”.
This process allows for consensus to be achieved on a batch of transactions rather than the network having to reach consensus on each and every transaction. Anyone can become an aggregator by placing a deposit (or bond) via a smart contract. Similarly, new rollup blocks can be challenged if the aggregator fails to include a transaction or posts an invalid one.
ORUs places heavy reliance on trust and game theory. Generally speaking, it can be assumed that aggregators will act honestly as their bond will be slashed if they act maliciously. Similarly, aggregators are able to determine how fees are submitted, meaning that the more developers they can convince to trust them with their contracts, the more they stand to gain.
In short, Unipig lets users swap “UNI” tokens into “PIGI” tokens (and vice versa) instantaneously without requiring gas. This means small transactions can be processed quickly without clogging up the Ethereum network.
“It feels just as fast as any other normal centralized application that you’re accustomed to using. Which is actually very sexy to a scaling company like (Plasma Group), and a DeFi app like Uniswap,”
Taking this a step further, ORUs present an interesting solution for any Ethereum-based product to increase throughput and UX simply by incorporating an optimized virtual machine.
Unlike many layer 2 solutions today which require complex integrations, native tokens and a strong degree of trust or reliance on the issuing entity, ORUs enabled through the OVM more closely align with Ethereum’s distributed ethos while accomplishing the mission of short-term scalability.
With the upcoming launch of ETH 2.0 or Serenity in the coming months, solutions like ORUs signal strong interest in immediate solutions to help bridge the gaps. As it currently stands, Ethereum’s usage doesn’t require TPS throughput as high as a giant like VISA, meaning that ORUs make a ton of sense in the short term.
With this being said, it’s unclear whether or not ORUs will be adopted by the ecosystem at large, seeing as many layer 2 projects are entirely banking on their solution(s) to drive the success of their project and/or products.
Regardless, the experience provided on Unipig was easily one of the fastest and most intuitive token products I’ve used to date, and I’m personally excited to watch more products work with such efficiency.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.